- How much will it cost me as an employer?
- What will my employees pay: premiums, copays, fees, deductibles?
- Will there be any subsidies?
- Will there be a tax increase to pay for this?
The U.S. healthcare system is grossly inefficient. Much of this inefficiency comes from the way the system is financed, particularly from the unnecessary complexity associated with commercial health insurance.
For every dollar employers pay to insurance companies in premiums, fewer than 80 cents go to doctors, hospitals and other providers of care. The remaining cents on the dollar go to the financing side of health care, costing hospitals and physicians to interface with the complex insurance industry. The collective waste adds up to 30% of insurance premium dollars, or $300 billion-400 billion annually.
Traditional Medicare, on the other hand, is much more efficient. For every dollar collected, via payroll taxes, over 95 cents goes to providers with less hassle and administrative cost. In addition, Medicare does a better job in general of negotiating reimbursement rates from providers for equivalent care. Medicare’s Advantage Plans, those Medicare supplements administered by commercial insurance companies, are less efficient. They add more than double the administrative cost of traditional Medicare.
Economists estimate that the cost of providing health coverage to the currently uninsured will be $77 billion annually. This is significantly less than the monies we will save from reducing inefficiency through Single Payer.
Countries throughout the industrialized world have recognized this phenomenon and have adopted Single Payer, with some variation, as a “best practice” in health care system structure. Simply put, Single Payer is publically financed, privately delivered health care. It can be delivered efficiently for all Americans, and we can save billions in cost.
Study after study shows that the costs of maintaining a national copay system outweigh the benefits, and that premiums and copays tend to induce poorer patients to withhold from seeking essential preventative care. Improved Medicare for All will eliminate fees, copays and deductibles.
National Improved Medicare for All will eliminate premiums, copays and deductibles. Insurance costs will be replaced by a payroll deduction, similar to Social Security and Medicare. The payroll taxes will be significantly lower than what employers are paying now to insure their employees.
Under Single Payer, employers will pay less because they will no longer provide commercial health insurance for their employees. Insurance costs will be replaced by a payroll deduction, similar to Social Security and Medicare. The payroll taxes will be significantly lower than what employers are paying now to insure their employees.
Here’s the math: The average wage for an American worker is $49,000. The average cost for employer-based commercial insurance is $19,000 per year for family coverage and $6,500 per year for single coverage. Therefore, the average cost of a health benefit is in excess of 15% of employee compensation. Further, insurance premiums do not include what employees additionally pay out-of-pocket for care. Those costs include rising deductibles and co-pays. The insurance premiums that employers pay also do not include the HR expense to administer health plans or the rising cost of other insurances that have a health care component, such as Workman’s comp; the state, local and school taxes that have a high cost of health care; or the overall drag health care has on disposable income that deteriorates demand for our products.
For many employers, the cost of a health care benefit is over 20% of payroll.